Suwon District Court 2010Guu12379 ( November 24, 2010)

early 2010 Heavy0815 (2010.06.07)

It shall not exceed three years for direct cultivation period of the requirements for reduction or exemption of capital gains tax on farmland substitute land.

As long as a third party has been allowed to cultivate rice continuously and harvest it, the period cannot be treated as the same as the minor period directly. Since the period for the Plaintiff directly cultivated the previous farmland is merely two years and ten months, and the period of direct cultivation falls short of three years as prescribed by the requirements for reduction and exemption of capital gains tax on the substitute land for farmland, the disposition of imposition excluding the reduction and exemption is legitimate.

Article 70(1) of the Restriction of Special Taxation Act

2011Nu1063 Revocation of disposition of imposing capital gains tax, etc.

XX Kim

O Head of tax office

Suwon District Court Decision 2010Guhap12379 Decided November 24, 2010

June 1, 2011

July 13, 2011

1. Revocation of a judgment of the first instance;

2. The plaintiff's claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s imposition of capital gains tax of KRW 119,720,580 against the Plaintiff on February 1, 2010 and special rural development tax of KRW 150,100 shall be revoked.

2. Purport of appeal

The same shall apply to the order.

1. The part citing the judgment of the court of first instance

A. The Plaintiff’s assertion is made on the grounds that the Court has used the instant case. The reasoning for the first instance judgment is as follows: Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act, the main text of Article 420 of the Civil Procedure Act.

2. Determination

In full view of Article 70(1) of the Act and Article 67(2) and (3)1 of the Enforcement Decree of the Act, in cases where a person who resided in the previous farmland for not less than three years and directly cultivated the farmland while residing in the new farmland for not less than three years within one year from the date of transfer of the previous farmland, the tax amount equivalent to 100/100 of the transfer income tax on the income accruing from the previous farmland substitute farmland shall be reduced or exempted. The Plaintiff should have been directly cultivated for not less than three years. However, even according to the Plaintiff’s assertion, even if the Plaintiff were to be exempted from the transfer income tax pursuant to the above provision, the Plaintiff has continuously harvested rice from August 18, 2005 to October 205, which the Plaintiff acquired the previous farmland of this case. Since the Plaintiff had cultivated directly and transferred the previous farmland on August 25, 2008, the period of the previous farmland of this case is under the premise that the Plaintiff directly cultivated and owned the farmland of this case.

After the transfer, the period cultivated by the plaintiff shall not be included.

The Plaintiff’s assertion that the period cultivated by thisA should also be included in the period of direct cultivation of the Plaintiff is difficult to accept for the following reasons.

① The Plaintiff asserted that he/she had been engaged in farmland rearrangement work, such as opening a farm road and waterway around the farmland during the above period. However, the entries and images of Gap 5 are insufficient to acknowledge it, and there is no other evidence to acknowledge it. Even if not, according to the evidence evidence No. 11, the Plaintiff did not always engage in 'agricultural cultivation' because he/she operated a singing practice room from Y-dong 433, 2004 to 18, 2008. During the farmland rearrangement work of the Plaintiff, the small river maintenance part was awarded contract to KimB (including evidence No. 5-1, 2), and the entire work of opening the remaining farm road does not fall short of 50% of the farming work (including rice farming and harvest made by thisCC). Thus, the Plaintiff did not engage in 1/2 or more of the farming work with his/her own labor.

(2) The growing of rice that thisA continues to be harvested refers to the characteristics that are difficult to immediately move the crops already cultivated and the transaction customs providing a person who is entitled to harvest rice. However, such circumstance does not constitute grounds for the reduction of the direct cultivation period (in cases where purchased by consultation, expropriated pursuant to the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects and expropriated pursuant to other Acts) recognized by the Act. Tax laws and regulations shall be interpreted as the legal text, barring any special circumstance, and expand or analogical interpretation shall not be permitted. This is the same as the direct cultivation of the period, unless thisA allows the person to grow rice and harvest it.

Since the period for which the Plaintiff cultivated the previous farmland directly falls short of the direct cultivation period stipulated by the requirements for reduction of capital gains tax on substitute farmland, the instant disposition is lawful.

3. Conclusion

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.